Bernanke hangs out with governors — U.S. works on Ukraine financial bailout package

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BERNANKE HANGS OUT WITH GOVERNORS — Former Federal Reserve Chairman Ben Bernanke attended the National Governors Association’s winter meeting in Washington yesterday to offer his take on the economy.

Bernanke, who left the Fed last month after serving eight years as chairman of the central bank, offered a “half-full, half-empty” assessment of the direction of the economy at a closed-door meeting with governors, according to a Democratic governor.

“The economy’s not what anyone of us would like it to be except if you’re the governor of North Dakota but for the rest of us — at least we’ve come a ways,” the governor said. “His big picture was we have some things definitely going for us.”

Bernanke gave a rosy outlook on the country’s education system, according to the governor, saying the United States has the best higher education institutions in the world, and also said that he was encouraged to see health care costs starting to trend down.

Bernanke also attended the annual NGA gathering in the beginning of 2009 when the economy was in tatters. The Democratic governor recalled the meetings with Bernanke, former Treasury Secretary Timothy Geithner and ex-OMB Director Peter Orszag that year being “three of the most depressing meetings I have ever had.”

And for all of you who are curious, Bernanke apparently did not say anything about how his successor, Janet Yellen, is doing as the new Fed Chair.

G-20 LEADERS PLAN $2T GROWTH SPURT —The G-20 meeting in Sydney wrapped up Sunday with a commitment from finance leaders to try to boost growth by more than $2 trillion over the next few years under a plan spearheaded by the IMF. WSJ’s Ian Talley and James Glynn: “Under the G-20 plan, advanced economies would continue with their easy money policies while emerging markets would seek to restructure their economies and tame inflation. In addition, governments would be expected to channel private-sector finance into new infrastructure projects. ... But if past efforts of the G-20 are any guide, investors should temper their hopes. The group's previous attempts to spur growth have fallen by the wayside, undermined by the realities of domestic and international politics.” http://on.wsj.com/NpUuVe

U.S. WORKS ON UKRAINE FINANCIAL BAILOUT PACKAGE — WSJ’s Jay Solomon, Vanessa Mock and Stephen Fidler: “The Obama administration worked Sunday with the European Union to forge a much-needed financial bailout of Ukraine, but also extended an olive branch to Russia by inviting it to join the effort ... [President] Obama and other senior U.S. officials held extensive discussions with Mr. Putin and his top aides over the weekend in an effort to support a peaceful political transition away from Mr. Yanukovych, a close Putin ally, according to senior administration officials.

“U.S. officials, in particular, sought to work with Moscow to fashion a multi-billion-dollar International Monetary Fund rescue package for Ukraine. Russian Finance Minister Anton Siluanov —who discussed developments in Ukraine with his American counterpart, Jacob Lew, on Sunday — didn't rule out supporting the IMF. But he said Moscow had placed on hold its own $15-billion assistance package for Kiev.” http://on.wsj.com/OrOcFw

LEW OFFERS SUPPORT TO NEW UKRAINIAN GOVERNMENT: On his way back from Sydney, Treasury Secretary Jack Lew spoke by phone with Ukrainian leader Arseniy Yatsenyuk, according to a Treasury official. Lew told Yatsenyuk there was broad support at the G-20 meeting for an international assistance package centered on the IMF as soon as the transitional Ukrainian government is fully established by the parliament. He encouraged the Ukraine to begin discussions with the IMF as quickly as possible thereafter, the official said.

Lew also said the United States — along with Europe and others in the international community — is ready to supplement an IMF program to cushion the impact of reforms on low-income Ukrainians, but he underscored the need to implement reforms that could be supported by an IMF program, according to the Treasury official.

Speaking in Sydney on Sunday, IMF Managing Director Christine Lagarde said the fund is ready to provide support, but could only do so in response to a formal request. “We need to have somebody to talk to because any discussion takes two.” http://nyti.ms/1bZVNpt

FED’S 2008 TRANSCRIPTS — The Federal Reserve on Friday morning dumped hundreds of pages worth of transcripts from more than a dozen FOMC meetings and conference calls held in 2008.

The documents reveal a fascinating in-depth look at how U.S. central bankers responded to both the build-up to and culmination of the global financial crisis. Here’s your Fed transcript fly around:

HIGHLIGHTS FROM THE FED CRISIS TRANSCRIPTS — POLITICO’s MJ Lee, Kate Davidson and Kevin Cirilli: “The hundreds of pages of documents show that as the financial crisis unfolded, central bank officials first struggled to anticipate the gravity of the threats to the economy and financial system and then wrestled with how to most effectively respond to a deepening recession.” http://politico.pro/1lckFNl

NEW VIEW INTO FED'S RESPONSE TO CRISIS — WSJ’s Jon Hilsenrath: “Two days after U.S. officials decided to let Lehman Brothers collapse in September 2008, and just before the Federal Reserve unleashed a torrent of programs to bolster the financial system, central-bank officials were still struggling to grasp the magnitude of the calamity that had hit the economy. ‘I think that our policy is looking actually pretty good,’ Fed Chairman Ben Bernanke said of the level of interest rates at a closed-door Fed policy meeting on Sept. 16, 2008, according to transcripts of its policy meetings that were released Friday after the traditional five-year lag.” http://on.wsj.com/1l5vnFA

DEUTSCHE BANK RESPONDS TO FED RULES — FT’s Alice Ross in Frankfurt: “Deutsche Bank has for the first time laid out its plans to slash its US balance sheet as it seeks to allay concerns over how it would deal with tough new rules imposed by the Federal Reserve on foreign banks. The lender aims to reduce assets held in its US arm by up to a quarter largely through reassigning some operations to Europe or in Asia.” http://on.ft.com/Np6N47

** Since 2001, credit unions have increased the federal debt by NOT PAYING AN ESTIMATED $22.3 BILLION in federal income taxes. Congress: Why should taxpayers pay more in taxes so that credit unions can pay none? @ItsTimetoPay **

MOVING IN THE HOUSE THIS WEEK — The House is set to consider on Wednesday two Financial Services bill. The first is Rep. Michael Grimm’s flood insurance affordability act (we have not yet seen the new text); the second is Rep. Sean Duffy’s “Consumer Financial Protection and Soundness Improvement Act of 2013.”

MT. GOX RESIGNS FROM BITCOIN FOUNDATION — Bitcoin exchange Mt. Gox has given up a seat on the Bitcoin Foundation’s board of directors after the Japan-based firm suspended customer withdrawals. Mt. Gox is one of the oldest Bitcoin businesses and a “gold” member of the non-profit Foundation, which is an advocate for the digital currency in Washington and leads development of the open-source protocol.

“We are grateful for their early and valuable contributions as a founding member in launching the Bitcoin Foundation,” the Bitcoin Foundation said in a statement today. Mt. Gox Chief Executive Mark Karpeles held a board member seat at the Foundation. Last month, BitInstant Chief Executive Charlie Shrem resigned as the board’s vice chairman after his arrest for an alleged money laundering scheme. Mt. Gox was not immediately available for comment.

BARTIROMO MAKES FOX BIZ DEBUT — Maria Bartiromo makes her debut on Fox Business Network this morning, after two decades as the face of rival CNBC. Opening Bell with Maria Bartiromo premieres at 9 a.m.

STORY WE COULDN’T STOP READING THIS WEEKEND — WSJ’s José de Córdoba and Santiago Perez in Mexico City and Andrew Grossman in Washington on how Mexico nabbed its most-wanted drug lord: “Before dawn this month, a convoy of Mexican marines quietly surrounded a house in the Spanish colonial city of Puebla and arrested an alleged drug trafficker also wanted for questioning over the kidnapping of a Mexican politician. Little did the marines know then, but his capture would become a vital piece of the puzzle that would help Mexican and U.S. officials several days later to nab the world's most sought after drug lord, Joaquín “El Chapo” Guzmán. U.S. and Mexican crime-enforcement officials hailed Saturday’s arrest as the biggest blow to organized crime since the 1993 killing of Colombian capo Pablo Escobar.” http://on.wsj.com/1jscRE7

U.S. INVESTORS LIKE WHAT THEY SEE IN EUROPE — WSJ’s Kaitlyn Kiernan: “U.S. fund managers are rediscovering their passion for Europe — and not just as a vacation destination. Since the start of the year, American investors have ramped up their bets on European stocks, spurred on by a brightening economic outlook and low interest rates. The continent's stock markets became a favored destination last year as the region emerged from a bruising recession. This year, with U.S. stock indexes treading water after a rip-roaring 2013, interest in European stocks has grown further, fund managers say.” http://on.wsj.com/Mm0RIm

ACKMAN SEES BIG UPSIDE TO FANNIE, FREDDIE BETS — WSJ’s Julie Chung and Nick Timiraos: “William Ackman is taking a big gamble on Fannie Mae and Freddie Mac but recently said at an investment conference he sees a huge upside on the bet: the hedge-fund manager said he believes the common shares of the mortgage-finance giants could be worth more than 10 times their current value in several years.

“In his first extended comments since he bought sizable stakes in Fannie and Freddie, Mr. Ackman said he is convinced shareholders will win their lawsuits against the U.S. government that challenged the Treasury Department’s bailout agreement with the two companies, according to people who heard Mr. Ackman’s remarks.” http://on.wsj.com/MS4TJ8

ALSO FOR YOUR RADAR —

RUSSIA’S PUTIN FACES TOUGH CHOICE ON UKRAINE — Reuters’ Timothy Heritage: “President Vladimir Putin faces a decision over Ukraine that is likely to shape his political legacy as well as the future of Russia's western neighbor, trapped in an East-West battle that has echoes of the Cold War. President Viktor Yanukovich's loss of power deprives Putin of an ally vital to his hopes of keeping Ukraine, the cradle of Russian civilization, in what he sees as Russia's orbit.” http://reut.rs/MRbiob

HARRY REID AIMS FOR ELECTION YEAR BIPARTISANSHIP — POLITICO’s Burgess Everett: “Harry Reid is aiming for a dash of bipartisanship in his election-year game plan. The Senate majority leader will still push long-shot measures, like paycheck fairness and hiking the minimum wage, designed to appeal to his party’s base. But now he’s considering taking up bills that some Republicans actually support, too, like a manufacturing bill and a prison reform measure.” http://politi.co/1mC1nmf

** The credit union tax exemption is among the largest corporate tax expenditures. As credit unions leverage their tax exemption to grow aggressively, the cost to taxpayers has grown even larger. Congress tell the credit unions @ItsTimetoPay **